Monday, December 19, 2016

What Do Their Deaths Mean?

Thomas Schelling

The late Thomas Schelling is often described as a "game theorist", but what that means is rarely clearly discussed. Game Theory is usually conceived as a branch of mathematics, an abstruse brand of pseudo-psychology inspired contests between hyper-rational contestants. And it is true, game theory is an abstruse brand of mathematics. It can and has been used by philosophers such as Jaako Hinitikka to ground our idea of quantifiers. It can and has been used by mathematicians such as Abraham Wald to ground our idea of statistics.

I don't think Thomas Schelling ever used mathematics beyond a high school level. In that sense, he was not a game theorist in the sense of Von Neumann and Bob Aumann. Schelling's contributions were not mathematical, they were philosophical. Thomas Schelling is one of the most consequential social philosophers of the 20th century. What was important to Schelling was not Game Theory's difficult technical content, but rather the important constraint that everyone's decision depends on everyone else - at least on that. This concept of equilibrium - the balance of the personal actions of each actor - lead Schelling to the concept of commitment. Equilibria allowed Schelling to escape escalation.

"As little as possible..."
- Chinatown

War, and especially nuclear war, was Schelling's great fear. Why did the great powers go to war in World War 1? There are many, many historical roots, but certainly the basic answer is for various reasons the high command of each European country badly missestimated the willingness of every other European country to go to war. Norman Angell was wrong - France & Germany would go to war over Alasce-Lorraine even if it meant breaking linkages and reducing output. Why couldn't the Great Powers after a year of war (which certainly revealed the true willingness to fight) get together to multi-laterally deescalate? The War cut off their ability to communicate, there was no focal point at which they could come together. Even though everyone knew that their opponent was more ferocious than they had allowed, they couldn't act on it.

Or take the famous Camp David Accords. Israel and Egypt both wanted to avoid further war. But Egypt didn't know for sure that Israel wouldn't become belligerent. And so Israel couldn't know if Egypt knew that Israel didn't want further war. And so on and so on. If you're Jimmy Carter, how do you make the true intentions of Egypt & Israel "common knowledge" (an expression coined by Schelling - who also coined "focal point", "collateral damage", ...).

The concept of international politics that is developed by Schelling in his book Arms And Influence is that of a broken, abusive family. Schelling's goal was to stop them from murdering each other, despite the gaslighting, the stealing and the drunken brawls. Who can forget his infamous analysis of rational irrationality? If you can convince them you're crazy enough to burn the whole thing down, they have to give into your demands. So when North Korea acts up again, the last thing you want to do is over commit and escalate...

Thomas Schelling's work went beyond war, of course. There are two pieces I'd like to pick out as particularly interesting.

The first is the famous Schelling Discrimination model. This model is exposited in his book Micromotives And Macrobehavior. One sunny day, Schelling was listening to an interview of Fidel Castro. Castro called America a "racist nation". Schelling, of course, didn't think the descriptor fair but then how can you explain all the obvious discrimination? Schelling decided to define down discrimination and examine the consequences when everyone had weak preferences but they all had to be satisfied together. Using pennies & nickels on a chessboard, he found that he could construct scenarios where initially mixed neighborhoods spontaneously segregated even though nobody particularly wanted to be in the majority (as long as they had a couple friends).

Now, as a model of racial discrimination in neighborhoods this model is a nullity. Racial discrimination in neighborhoods was not spontaneous. As to spatial economics it isn't up to snuff, since there aren't any prices. One can't do comparative statics of an anti-discrimination law with a Schelling model. As a mathematical model it already existed under the name "Ising model" and had been solved in the 40's. The contribution of the model was philosophical. The contribution of the model was to introduce complex system behavior. These complex systems can't necessarily be captured by aggregate models. In the Schelling model there lurks a representative agent. The agent isn't "racist" - he doesn't necessarily dislike being in the minority. But he lives in a segregated society and does nothing about it.

The second contribution of Schelling's I want to pick out is his discussion of addiction. His thoughts on addiction are developed in his book Choice And Consequence. The first economist to seriously discuss addiction was Gary Becker, who posited that addiction was a "rational" behavior - that is, increases in the price of cigarettes (and reduction of prices of cigarette substitutes, etc. etc.) will tend to reduce the use of cigarette demand. Schelling offered a much more radical interpretation that addiction is the result of internal bargaining. In order to become an ex-addict, the addict must engage in the kind of commitment strategies analyzed by Schelling in the field of international relations. Anyone who has known addicts has even seen them act out Schelling's famous rational irrationality in order to convince themselves and others that they will remain addicts.

This is also a philosophical contribution. Students will recall from their micro classes that a group may be licitly aggregated in a supply & demand model if the aggregate obeys "WARP", otherwise they must be distinguished. Schelling recognized that there was no secret sauce on a man's skin that made this axiom true within him.

One could go on and describe Schelling's influence - such as inspiring the David Lewis/Brian Skyrms approach to reviving the Humean project of reducing meaning to preference theory or inspiring a million internet types to call every possible behavior as "signaling". But that would be an injustice to his own creativity. Instead, the best thing to do is to remind ourselves of the moral weight. In Schelling's analysis, when other channels breakdown governments murder in order to communicate. Even if we are saddened, we must go on. What does all that death mean?